How Do You Know When to Drill?

Knowing 'Everything' Is Not the Point

How much information is enough when you're drilling an exploration well?

The standard answer might be, "A little bit more," or "You can never have too much information."

But the exploration expert would say, "Just enough, and not a bit beyond that."

Marlan W. Downey became Shell's youngest chief geologist, served as the company's first Alaska Division exploration manager and later led worldwide exploration efforts as president of Pecten International and also Arco International Oil and Gas.

In his industry career, he sometimes found an exploration team searching for information instead of searching for hydrocarbons.

"That's when I tell staff, 'We're not here to learn. We're here to make money finding oil,'" Downey said.

When Enough Is Enough

Ted Beaumont operates TriOks, a one-man, independent prospect-generating company in Tulsa. A former science director for AAPG, he's building a career on exploration success.

Beaumont not only has to find the key to a play, he has to develop the information to support it and convince someone to drill it.

"If you have a lot of information that really confirms an idea, if they can see that, you can get people to buy it," he said. "Even when times are tough, you can get that done. Information is critical."

Knowing exactly what information matters, and how much to gather, might seem to be more art than science. But Downey said science has taken a hard look at the process of compiling information.

"There's already a fair amount of studies and mathematical analysis about the value of incremental information," he observed.

Developing information costs money. Any added increment of information costs more than the previous increment, because the most accessible and least-expensive information tends to be acquired first.

The cost of added information can be weighed against its value in solving a problem. And should be.

Downey became a professor in the University of Oklahoma's School of Geology and Geophysics, was chief scientist at the university's Sarkeys Energy Center and has served as AAPG president.

His work on the scientific method in exploration led to an assessment of incremental information. The value of adding information in exploration can be defined to a limit, according to Downey.

"Very simply, that is when the new information no longer changes in a significant way the picture that you have," he said. "That's a nice, simple way of looking at it."

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How much information is enough when you're drilling an exploration well?

The standard answer might be, "A little bit more," or "You can never have too much information."

But the exploration expert would say, "Just enough, and not a bit beyond that."

Marlan W. Downey became Shell's youngest chief geologist, served as the company's first Alaska Division exploration manager and later led worldwide exploration efforts as president of Pecten International and also Arco International Oil and Gas.

In his industry career, he sometimes found an exploration team searching for information instead of searching for hydrocarbons.

"That's when I tell staff, 'We're not here to learn. We're here to make money finding oil,'" Downey said.

When Enough Is Enough

Ted Beaumont operates TriOks, a one-man, independent prospect-generating company in Tulsa. A former science director for AAPG, he's building a career on exploration success.

Beaumont not only has to find the key to a play, he has to develop the information to support it and convince someone to drill it.

"If you have a lot of information that really confirms an idea, if they can see that, you can get people to buy it," he said. "Even when times are tough, you can get that done. Information is critical."

Knowing exactly what information matters, and how much to gather, might seem to be more art than science. But Downey said science has taken a hard look at the process of compiling information.

"There's already a fair amount of studies and mathematical analysis about the value of incremental information," he observed.

Developing information costs money. Any added increment of information costs more than the previous increment, because the most accessible and least-expensive information tends to be acquired first.

The cost of added information can be weighed against its value in solving a problem. And should be.

Downey became a professor in the University of Oklahoma's School of Geology and Geophysics, was chief scientist at the university's Sarkeys Energy Center and has served as AAPG president.

His work on the scientific method in exploration led to an assessment of incremental information. The value of adding information in exploration can be defined to a limit, according to Downey.

"Very simply, that is when the new information no longer changes in a significant way the picture that you have," he said. "That's a nice, simple way of looking at it."

Both Eyes on the Prize

In practice, adding incremental information makes sense only if it further defines a play in a meaningful way. If new information makes no change in your analysis, you may be at the information limit.

But if you acquire a seismic line and the data reshapes your concept of a play, then you haven't gathered enough information, Downey said.

Cindy Yeilding is technology unit leader for BP in Houston, and a current Distinguished Lecturer for AAPG. She also had a key role in the company's Thunder Horse discovery in the Gulf of Mexico.

Yeilding sees information as part of a risk-reward picture. The cost of adding information can be justified only if the information reduces risk in a meaningful way.

"There's always going to be uncertainty — you can't get around that," she said. "When evaluating a prospect, we do a technical evaluation and assessment of all of the key geologic risk elements.

"Combining the principles of good old-fashioned geology and high technology using tools such as seismic depth imaging, spectral decomposition and basin modeling — we assess the trap, charge/source, reservoir and seal potential for the prospect."

Yeilding said all of these elements "are risked, multiple models and uncertainties are investigated, economics and potential value are assessed."

BP then ranks the prospect against other opportunities within its portfolio, with the highest-value, lowest-risk, most-strategic play receiving funding.

"We ask, 'Is the prize big enough? Are the risks small enough to justify the prize?'

"The way we tend to look at it," Yeilding added, "you get to a point where you can't do any more work that will lower the risk."

Knowing What Matters

As an independent, Beaumont tries to hold costs to a minimum.

But he also needs to offer information that will convince someone to spend the money to drill a well.

In that, he's not so different from an exploration team "selling" its prospect to management for drilling approval.

"You try to be as efficient as you can. You try not to waste money," Beaumont said.

"In some cases," he noted, "you have people who will buy your prospect only if it has seismic data. There are people who won't take a deal without 3-D data. There are people who won't take a deal that doesn't have an offset well that's producing."

To get the right information without wasting money and time, Beaumont has to determine what matters most in developing a new prospect.

"It really depends on where you're looking," he said.

"If you're looking in a real frontier area where there's not a lot of well control, obviously you've got to have a certain amount of information that gives you the impression that your effort might be successful — outcrop data, source rock, reservoir-quality rock, anticline, surface work and so on."

He divides approaches to exploration into three categories:

  • Technique — Using an exploration tool or technique, like surface geochemistry, to identify promising plays.
  • Area — Prospecting only in a limited, familiar geographical area.
  • Trap — Specializing in plays built on one type of trap, like reef plays or trend exploration.

With a world of possibilities, almost all exploration begins by targeting a specific area. "Is it in the right place? We say, 'Is it in the right zip code?' From there, we start looking at what the best prospects are in the right area," Yeilding said.

"We like to have a strong regional understanding of our plays to help us focus in on the best geography/geology," she added. "Having a robust regional framework for a basin helps us understand the potential, and allows us to rank different opportunities around the world."

By working different plays and geographies within a basin, BP can high grade the lowest-risk plays, Yeilding noted.

"This high-grading helps us focus our resources and efforts into smaller geographic areas rather than spread ourselves thinly across the entire basin," she said, "and forces us to constantly high grade our exploration plays."

Beaumont said he begins by defining an area to examine, then looks at individual formations.

"When I look at an area, I have to try to understand what's happened in that area. I have to understand what zones have produced and why they've produced," he said.

"You're breaking things down into critical factors when you're looking at an area, and you're trying to decide what's going to make a difference," Beaumont added.

"That's where experience comes in. You learn what matters and what's important. You don't want to get lost in the forest — not seeing the forest because of all the trees around."

Using the Global Brain

At BP, an exploration team can call on experts from throughout the company to help assess and analyze information.

"We use a lot of peer review, so we try to use the global brain," she said. "We will call on expertise from other parts of the company before we determine if we have a drillable prospect."

Outside viewpoints can bring perspective to both the quantity and quality of information used in building a prospect. BP brings in that outside expertise while a prospect is being considered.

"Because we have the luxury of a big global geoscience brain, we hold peer reviews at various stages of prospect maturation and prior to approval for drilling," Yeilding said.

"This allows us to use constructive challenge and draw upon our global experience to ensure that all aspects of the prospect have been thoroughly evaluated and appropriately assessed."

An independent working alone also can use the global brain, according to Beaumont.

"The Internet has made things more available to individuals, if they want to take advantage of it," he said.

As an example, he cited companies that will let an independent access and analyze their seismic data to generate prospects, as long as the company gets first right-of-refusal on the prospects generated.

Beaumont called that a "win-win situation," because the company can end up with an attractive play, and the independent has a built-in investor for a good prospect.

Tapping the global brain requires more creativity on the part of the independent, and a solid network of expert colleagues.

"If you're an independent, you never really work by yourself," he said. "Independents form a full team for each prospect area we're working on or for each project.

"That team may go on to another project or prospect, or it may dissolve and never come back together again."

Curiosity, and Satisfaction

In the end, the information-gathering effort will always face the limiting constraints of time and money.

"Almost all of our work in the Gulf of Mexico is on 3-D seismic data," Yeilding said. "In our deeper, subsalt plays, balancing the cost of new seismic data and depth imaging, the timing required to get the best subsurface image and the timing of needing to drill a well is often a struggle.

"We constantly find ourselves trying to balance the applications of the appropriate technologies to obtain suitable results for drilling an exploration well in the time required," she added.

For BP in the Gulf of Mexico, seismic costs outstrip the money spent on applying individual expertise and satisfying curiosity.

"The people time is not very expensive, in the big scheme of things, because we're talking about tens of millions of dollars per well," Yeilding said.

Downey knows the benefits and pitfalls of scientific curiosity. It drives geoscientists to find relevant information for an exploration prospect — but satisfying their curiosity is never the point.

"Exploration is not a science," Downey said. "It's a business. You don't get to know everything about a stratigraphic prospect."

He's challenged geoscientists to avoid "the tendency to merely go after information for information's sake," asking them to asses how much information is necessary and worth acquiring.

Downey pointed out that oil companies are not in business to add to the body of scientific knowledge, or to make geologists and geophysicists wiser.

"That's not why shareholders give us money," he said.